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Advisers increasing minimum portfolio sizes since RDR

A survey has revealed that financial advisers have established a minimum investment threshold since the Retail Distribution Review, with advisers telling FTAdviser that £50,000 is the minimum portfolio they will deal with.

According to online investment platform Rplan, a quarter of advisers now require clients to have over £30,000 of investable assets.

During September and October, 137 professional financial advisers were interviewed by PollRight on behalf of Rplan, with 13 per cent admitting to having stopped offering services to over 20 per cent of their clients, because they are no longer commercially viable.

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The research showed that 16 per cent of advisers now have a minimum threshold of over £50,000.

Patrick Connolly, a financial planner at Chase de Vere, told FTAdviser that the firm brought in a typical minimum threshold of £50,000 in investable assets about three years ago in preparation for the RDR.

“I think that’s the norm for most IFAs, anything much less than £50,000 and its just not cost effective,” he added.

William Hunter, director at Hunter Wealth Management, explained that the firm would not engage clients with less than £50,000. “In theory we would consider a ‘transaction only’ but with an agreed acceptable to us ‘bespoke fee’ and no further ongoing service. We have however, never needed to do this in practice.”

Colin Rodger, managing director at Alexander Sloan Financial Planning, agreed that £50,000 was a realistic minimum for new clients. “Typically the cost of meetings, fact find, research, implementation and compliance would not offer value to clients with smaller amounts.

“I would take a view on reducing fees though depending on the circumstances,” he added.

Cleona Lira, IFA at 2Plan Wealth Management, said she has no minimum criteria, but it is unsustainable if all clients were below £30,000.

“I think all clients should have access to advice regardless of their wealth; it always makes me uncomfortable when clients tell me they don’t have enough wealth for me to manage and feel embarrassed. Sadly with the regulation and work involved it is also difficult to balance the principle with practice.”

Malcolm Coury, founder of Money Wise IFA, stated that theoretically their minimum was around £25-30,000 for advisory work, rising to £50,000 for discretionary model portfolios. “However, we tend to target clients with at least £100,000 investable, but will always take a view and try to be pragmatic.

“Our ‘average’ client is in the region of £160,000 but we have 47 with over £1m invested.”

Adrian Murphy, partner at Murphy Wealth, stated that their minimum portfolio for new clients is £250,000 although some flexibility is allowed for younger clients who are high earners.

Justin King, chartered financial planner at MFP Wealth Management, said that the firm targets clients with assets in excess of £1m and the minimum at which they feel value can be added is £500,000.

Stuart Dyer, chief investment officer at Rplan, noted that 56 per cent of advisers are planning to stop servicing some existing client accounts over the next 12 months, meaning the advice gap is likely to become bigger.